MBA 591 – Summer 2011 Faculty of Business Administration Bilkent University July 5, 2011
Resources and Capabilities of Wal-Mart
Wal-Mart had enough financial resources to make capital investments to improve its operations and labor productivity. Most important investments were technological investments such as the UPC (Uniform Product Code) infrastructure, the computerized system within stores and the satellite network that enabled almost real-time communication among the stores, the distribution centers and vendors. These technological resources can also be classified as equipment related
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It used the marketing theme of “We Sell for Less”; therefore, it could create a customer value in terms of price and service, focusing on customer benefits like “no questions asked” policy on returns. Thus, it was preferred for shopping by price sensitive customers especially in the categories of health and beauty aids, housewares and appliances. Besides, its promotional strategy was governed by the philosophy of “everyday low prices”. There were 13 promotions a year; one each month, two in December, and promotional prices were 10%-20% less than the regular ones. These were less costly compared to those of the competitors and they could result in twice as many sales as the others. Furthermore, its credit transactions accounted for less than 5%of its total sales which was another financial advantage of it compared to the other discount retailer whose terms of sale was also cash-and-carry. In conclusion, due to its reputation in low price and customer service, it could improve brand awareness and keep customers loyal.
On the other hand, Wal-Mart’s reputation enabled another additional advantage provided by the suppliers in terms of store management. All of Wal-Mart shoe, pharmaceutical and jewelry departments were handled by the licensees in 1975. Two-thirds of these accounted for 0.2% Wal-Mart’s discount sales, which was half of the industry average, in 1985.